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Bullet Trap, L.L.C. v. Waterproof Positive, LLC

Court of Appeals of Texas, Fifth District, Dallas

August 5, 2019

BULLET TRAP, L.L.C. F/K/A BULLET TRAP, INC., Appellant
v.
WATERPROOF POSITIVE, LLC D/B/A ENERGY ROOFING SOLUTIONS, Appellee

          On Appeal from the 199th Judicial District Court Collin County, Texas Trial Court Cause No. 199-04389-2016

          Before Justices Myers, Molberg, and Carlyle

          MEMORANDUM OPINION

          LANA MYERS JUSTICE.

         Bullet Trap, L.L.C. f/k/a Bullet Trap, Inc. appeals the judgment in favor of Waterproof Positive, LLC d/b/a Energy Roofing Solutions (ERS). Bullet Trap brings three issues contending (1) the evidence was legally and factually insufficient to support the jury's verdict on ERS's lost profits; (2) the trial court erred by awarding attorney's fees to ERS under section 38.001 of the Texas Civil Practice and Remedies Code because Bullet Trap converted from a corporation to a limited liability company the day the jury rendered its verdict; and (3) the trial court erred by awarding ERS attorney's fees for opposing Bullet Trap's counterclaims. We affirm the trial court's judgment.

         BACKGROUND

         Bullet Trap is a shooting range in Plano, Texas owned by Christian Putnam. Putnam was also the president and part owner of the Frisco Gun Club. Brandon Johnson was vice president for marketing of the Frisco Gun Club, and he also worked at Bullet Trap. Ernest Arnesen owned a roofing company, ERS. Johnson and Arnesen attended the same church, and they knew one another.

         In 2016, a hailstorm damaged Bullet Trap's roof causing the roof to leak. After talking to Johnson, Arnesen agreed to look at Bullet Trap's roof. Arnesen inspected the roof and saw it had sustained significant hail damage. As Arnesen and Johnson were talking in front of Bullet Trap, Putnam drove up. Arnesen told Putnam that the roof had suffered significant damage, and Arnesen advised Putnam to file a claim with his insurer. Arnesen told Putnam that his company might be able to replace Bullet Trap's roof for the amount of the insurance proceeds, and Putnam signed a contract with ERS.

         The contract provided that Bullet Trap would file a claim with its insurer for the hail damage, and ERS would provide information supporting a finding of damage to the roof. If the insurance company accepted the damage claim, ERS agreed "to perform the work approved by the Insurance Company for an amount not to exceed all insurance proceeds received by [Bullet Trap] in settlement of its claim." Bullet Trap promised to "retain ERS as the exclusive roofing contractor to perform the Work as approved by the Insurance Company" and to "pay to ERS the Proceeds upon [Bullet Trap's] receipt of same." When Putnam signed the contract, neither Putnam nor Arnesen was aware that the deductible on Bullet Trap's insurance policy was $25, 000.

         The insurance adjuster inspected the roof with Arnesen, and Arnesen pointed out the hail damage. The adjuster agreed that the roof needed to be replaced due to the hail, and he also determined the hail damaged the HVAC units and the rain gutters and that leaks in the roof had damaged the interior. Arnesen prepared an estimate of the cost to replace the roof and the gutters and determined the cost would be $212, 354.08. The adjuster accepted that estimate and also provided insurance payments for damage to the HVAC units and damage to the interior of Bullet Trap. The insurer paid Bullet Trap $201, 903.29 for the damage to the roof, gutters, HVAC, and interior. After reduction for depreciation and the deductible, the insurance payment attributable to the roof was about $155, 000. The insurance policy provided that the insurer would pay Bullet Trap the depreciated amount, $37, 100.75, after the roof was repaired.

         Putnam believed that under the contract with ERS, Bullet Trap would not have to pay the deductible. Arnesen suggested that they split the deductible and that Putnam use the portions of the insurance payment for the interior damage and HVAC damage to pay the deductible. Putnam refused to use those portions of the insurance payment for the deductible, and he believed Arnesen had promised that Bullet Trap would not have to spend any money other than the insurance payment attributable to the roof damage to pay for the roof replacement. Putnam sent Arnesen a letter purporting to terminate the contract.

         ERS sued Bullet Trap for breach of contract. Bullet Trap filed counterclaims for breach of contract, fraudulent inducement, and violations of the Texas Deceptive Trade Practice-Consumer Protection Act (DTPA). A jury determined that Bullet Trap had breached the contract and that ERS's damages for lost profits were $79, 919.73. The jury found against Bullet Trap on its counterclaims. The trial court entered judgment for ERS, awarding ERS the damages found by the jury. The court also awarded ERS attorney's fees under section 38.001 of the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8).

         SUFFICIENCY OF THE EVIDENCE

         In its first issue, Bullet Trap contends the trial court erred by not granting its motion for new trial, motion to modify the judgment, and motion for judgment notwithstanding the verdict because the evidence was legally and factually insufficient to support the jury's finding on lost profits. The jury determined ERS's damages for lost profits were $79, 919.73.

         When reviewing the legal sufficiency of the evidence, we consider all the evidence before the jury, crediting evidence in support of the verdict if reasonable jurors could, and disregarding evidence contrary to the verdict unless reasonable jurors could not. City of Keller v. Wilson, 168 S.W.3d 802, 823, 827 (Tex. 2005); Morris v. Wells Fargo Bank, N.A., 334 S.W.3d 838, 842 (Tex. App-Dallas 2011, no pet.). If there is more than a scintilla of evidence to support the finding, the evidence is legally sufficient. Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998). When the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983). If the evidence furnishes a reasonable basis for differing conclusions by reasonable minds as to the existence of a vital fact, then there is legally sufficient evidence, more than a scintilla, to support the fact. Id. When reviewing the factual sufficiency of the evidence, we examine all the evidence and set aside a finding only if it is so contrary to the evidence as to be clearly wrong and unjust. Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 407 (Tex. 1998); Cameron v. Cameron, 158 S.W.3d 680, 683 (Tex. App-Dallas 2005, pet. denied). In conducting our review of both the legal and factual sufficiency of the evidence, we are mindful that the jury, as fact finder, was the sole judge of the credibility of the witnesses and the weight to be given their testimony. City of Keller, 168 S.W.3d at 819; Hinkle v. Hinkle, 223 S.W.3d 773, 782 (Tex. App- Dallas 2007, no pet.). We may not substitute our judgment for the fact finder's, even if we would reach a different answer on the evidence. See Maritime Overseas Corp., 971 S.W.2d at 407; Hinkle, 223 S.W.3d at 782.

         "Lost profits are damages for the loss of net income to a business and, broadly speaking, reflect income from lost business activity, less expenses that would have been attributable to that activity." Examination Mgmt. Servs., Inc. v. Kersh Risk Mgmt., Inc., 367 S.W.3d 835, 840 (Tex. App.-Dallas 2012, no pet.). Texas law concerning recovery of lost profits is well settled.

Recovery for lost profits does not require that the loss be susceptible of exact calculation. However, the injured party must do more than show that they suffered some lost profits. The amount of the loss must be shown by competent evidence with reasonable certainty. What constitutes reasonably certain evidence of lost profits is a fact intensive determination. As a minimum, opinions or estimates of lost profits must be based on objective facts, figures, or data from which the amount of lost profits can be ascertained. Although supporting documentation may affect the weight of the evidence, it is not necessary to produce in court the documents supporting the opinions or estimates.

Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex.1992) (citations omitted); see ERI Consulting Eng'rs, Inc. v. Swinnea, 318 S.W.3d 867, 876 (Tex. 2010) (quoting Holt Atherton). "Reasonable certainty" of lost profits is not shown when the profits claimed to be lost "are largely speculative, as from an activity dependent on uncertain or changing market conditions, or on chancy business opportunities, or on promotion of untested products or entry into unknown or unviable markets, or on the success of a new and unproven enterprise." Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex. 1994). "The calculation of lost profits must be based on net profits, not gross revenues." Examination Mgmt. Servs., 367 S.W.3d at 840 (citing Holt Atherton, 835 S.W.2d at 83 n.1 (Tex. 1992)).

         To prove its lost profits, ERS used the following calculation:

Roof replacement amount approved by insurance company

$211,262.01

Gutters/Downspout Repair amount approved by [ins. co.]

$2,854.94

Total Insurance Approved Amount:

$214,116.95

Less Materials and Labor

Materials (See attached)

$58,193.23

Tax (on materials)

$4,800.94

Skytrac/heavy equipment

$4,800.00

Labor

$21,200.00

Warranty

$1,450.00

–$90,444.17
Less variable overhead costs [1] –$43,753.05

Damages:

$79,919.73


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